AGM
Annual General Meeting. The meeting for shareholders at which routine matters, such as the election of directors and the approval of reports and accounts, are put to the vote of shareholders.

Assets
Fixed assets include land, machines and buildings; current assets consist of cash, money owed, stock, investments and work in progress; intangible assets are goodwill, trade marks, patents, etc; liquid assets are funds kept in cash or in a form that can be quickly and easily turned into cash.

Auditor
An independent firm or person who checks the accounts against agreed standards.

Base rate
Annual interest rate on which lending charges are calculated by British banks. Basis point Usually one hundredth of a percentage point (0.01 per cent), used in quoting movements in interest rates or yields on securities.

Bear
A person who expects prices of shares and/or stock markets to fall.

Bear market
A period of falling share prices; a pessimistic state of affairs. See also bull market.

Bid Price
The price at which securities in the market may be bought.

Blue chip
A stock considered reliable with regard to dividend income and capital value.

Bonus Issue
The issue of new shares to an existing shareholder, but at no extra cost. A means for the company to distribute historic retained profits to shareholders.

Brokers Forecast
Estimates of future company performance issued by stockbrokers and bank analysts.

Bull
A person who expects the price of shares, and/or stock markets, to rise.

Bull market
A period of rising share prices; an optimistic state of affairs. See also bear market.

Capital gain
Profit made on the sale of shares, commodities, property or land, capital gains tax may be payable on the profit.

Cash flow
Measure of the actual cash generated by a business rather than the accounting profit.  this is typically pre-tax profit plus depreciation, amortisation and other non-cash charges less other cash expenditure incurred by a business such as tax and purchases of fixed assets.

Closed period
The period prior to the company's release of its Interim or Preliminary results, during which the directors and certain other employees are not permitted to trade in the shares of the company. Normally two months.

Consensus forecasts
A market average of stockbrokers' and bank analysts' forecasts of the future financial performance of a company.

Cum dividend (cum cap, cum all (see ex:))
Purchase of a share cum dividend means that the buyer of a share is entitled to the next dividend payment; cum rights means that the purchaser is entitled to shares from a forthcoming rights issue; cum cap means that the purchaser is entitled to a scrip issue; cum all means that the purchaser is entitled to all of these. Opposite of ex.

Current assets
Assets of a company which can be realised in cash, sold or consumed within one year. Typically the sum of cash, cash equivalents, receivables, inventories, prepaid expenses and other current assets.
 
Current liabilities
Liabilities of a company that the company expects to satisfy within one year. Typically accounts payable, short term debt, notes payable, taxes payable, dividends payable and other current liabilities.

Debt/equity ratio
A ratio which describes the leverage or gearing of the company and is calculated as total debt divided by common shareholders' equity expressed as a percentage.

Depreciation
The reduction in the balance sheet value of a company asset to reflect its loss of value through age and wear and tear.
 
Dividends
The proportion of a company's profit that it pays to its shareholders, a dividend paid during the financial year is called an interim dividend payment and a dividend paid following shareholder approval of the company's year end accounts is called a final dividend.

Dividend cover
The number of times a company could pay its most recent net dividend out of its net profit (profits after tax).

Earnings
Profit available to ordinary shareholders, after all operating expenses, interest charges, taxes and preference dividends have been deducted. Excludes extraordinary items.

Earnings per share (EPS)
Earnings divided by the number of ordinary shares outstanding. Diluted earnings per share adjusts the number of shares to reflect the potential number of shares outstanding after the exercise of options or convertible debt.

EGM
Extraordinary General Meeting. A meeting of shareholders which may be called to approve special events such as a take-over, or major acquisition.

Equity
The voting capital in the company, represented by the ordinary shares.

Ex dividend, ex rights, ex cap, ex all
Purchase of a share Ex dividend (xd) means that the buyer of a share is not entitled to the next dividend payment; ex rights means that the purchaser is not entitled to shares from a forthcoming rights issue; ex cap means that the purchaser is not entitled to a scrip issue; ex all means not entitled to any of these. Opposite of cum.

Gearing
The ratio of a company's share capital to its debt.

Gross Profit Margin
Total profit made in the year as a percentage of sales.

Hedging
Reducing exposure to risk of loss resulting from fluctuations in exchange rates, commodity prices, interest rates etc.

Holding company
Company whose main assets are shareholdings (usually controlling) in other companies.

Institutional investor
Large financial institutions such as pension funds, unit or investment trusts and insurance companies.
 
Intangible assets
Describes assets that do not have a physical, tangible existence. Examples of intangible assets could include goodwill, brand value or patents etc.

Interest payable
This is the interest that is due to be paid within one year and as such falls within current liabilities on the company balance sheet.

Interim results
Unaudited first half figures that provide an indication of the company's trading and profit performance since the last full year accounting period.

Liabilities
The debts of a company and other financial obligations; the opposite of assets.

Liquidity
The proportion of cash or cash equivalents in a company's assets. Sometimes used as a measure of the near term financial health of a company. Also a measure of the volume of shares being traded, which may affect the ability of buyers or sellers to build/unwind large holdings without a substantial impact on the price.

Long term debt
All interest-bearing financial obligations which mature in more than a year.

Margins Profit
margin is profit as a percentage of revenue (or turnover). It is calculated before interest charges and tax.
 
Market Price
The price at which a share can currently be traded in the market.

Market capitalisation
Value at current market prices of a company's equity capital. It is calculated by multiplying the current share price by the number of shares outstanding.

Mid Price
The mid point between the bid and offer price quote in the market.

Net profit
Profit that is left after all expenses and deductions have been made.

Offer Price
The price at which securities may be sold in the Market.

Operating profit
The difference between turnover and the costs incurred during operations (total operating costs).

Option
The right (but not the obligation) to buy or sell securities at a given price (exercise or strike price) before a given date (expiry date).

Ordinary Share
The most common class of share representing the owners interest in a company.

Price/earnings (P/E) ratio
The price earnings ratio compares the earnings per share of a company to the market price of the company's shares. The earnings would normally be for a twelve-month period. The share price would be for a particular day and thus it would not match the earnings unless it were an average for that period. This ratio can be used to gauge the perceptions of the market to holding shares in particular companies.

Price/earnings ratio = Share price/ earnings per share

Placing
Raising money by issuing new shares and 'placing' them, generally in substantial amounts, with major investors.

Prelims
The first release of a company's results for the financial year to the stock exchange.

Pretax profit
All income (or loss) before tax.

Profit
The surplus of turnover generated over costs incurred for a particular accounting period. Operating profit refers to the profit generated before interest and tax have been taken into account.

Prospectus
A document, published prior to the issue of shares to the public, which explains all aspects of a company's business, detailing financial and other information about the company and the securities being offered for sale.


Real return
Return adjusted to take account of inflation.

Receivables
A current asset that represents amounts due to the company from the sale of goods and services on credit.

Retail price index (RPI)
A broad basket of goods/services whose price is calculated monthly and which provides a broad measure of the level of inflation.

Return on capital employed
Percentage earnings on capital invested in the business by the shareholders. This measure is used to estimate the return the company has achieved on the assets it uses. The calculation uses average capital employed over a period (usually the financial year), attributable to funds provided by the shareholders. Average capital employed excludes interest bearing borrowings and cash deposits.

Rights issue
Offer of shares to existing shareholders to raise money.

Risk premium
The excess return over a risk-free asset (eg a gilt) which investors will require to compensate themselves himself for the higher risk associated with holding an asset like an equity.

Securities
A financial instrument issued by a company and traded on a Stock Exchange.

Share capital
Common shares outstanding.

Share option
See Option.

Short
The term to describe the position of investors that have sold shares they do not possess, in the hope of buying them later at a lower price.

Short term debt
The portion of debt that is payable within one year. Falls under current liabilities on the company balance sheet.

Spread
Usually the difference between the Bid and Offer prices.

Tangible assets
Tangible fixed assets represents property.

Total shareholder return (TSR)
Total shareholder return (TSR) is the measure of the returns that a company has provided for its shareholders, reflecting share price movements and assuming reinvestment of dividends. It is, therefore, a good indicator of a company's overall performance.

Yield
The Rate of return gained on an investment. It also refers to the dividend payable on a share (and is expressed as a percentage of the market price).